This question is for the folks that have a budget. If you wind up coming under your budget for each category you have set, what do you do with the remaining money? Does it roll over into next month for bills? Do you use it at your discretion?
As I worked on my budget last night, I told myself that even though I have a specific amount budgeted out for each category, I would work on always coming under my budget. But then I had to ask myself, "What will I do with the left over money?".
After some careful thought, I have come up with 2 scenarios. I can either transfer the remaining money to my savings account (the one I had for my home purchase) and then apply it to my cc debt every time the balance reaches $100. Or I can transfer the remainder to my savings account and use it for a vacation (my sister suggested this).
All this depends on how well I do keeping under my budget each month. So none of the scenarios is guaranteed.
Has anyone run into this situation? If so, what do you do with that remaining amount? Do you treat is as "found money"?
Recent Divine Discussions
Friday, August 31, 2007
This question is for the folks that have a budget. If you wind up coming under your budget for each category you have set, what do you do with the remaining money? Does it roll over into next month for bills? Do you use it at your discretion?
Here is my to-do-list for August. I'll do one for each month from now on. This should help me keep focused and on track.
August To Do's:
- Find more avenues for bringing in extra money
- "Pay To" sites
- Google (Hustler did a post on how to make extra money with google)
- Notary Signing Agent
- Create blog geared towards single moms in the Orlando area
- Use coupons when purchasing groceries
- Always shop with a list
- Detailed tracking of spending
- Start and stick to exercise routine
- Create and stick to schedule for myself and daughter (school/work week)
- Read my personal finance books
- Prepare food in advance on Sundays to help out with time during the school/work week
Thursday, August 30, 2007
I just got done with my end of the month report. I have put the whole home purchase business of hold for now. My report for August only contains information related to my new PF goals.
I have changed some of my due dates.
As you can see my credit card debt increased by a lot. I have no excuses and I won't even elaborate on how it increased so much. All I know is that it ain't getting any higher than this and I am taking action. I am happy that I am so close to my initial emergency fund goal. Once I hit the $3000 mark this September, I will move my goal out to $10K. @ that rate of $200 a month I should reach that goal in 35 months from September. But I have bonuses, extra income, my tax refunds, and raises to take into consideration during that time so I know I will reach the goal way before 35 month.
I also redid my budget. I think this is the first time I have done a real budget. I am pretty proud of myself. I went ahead and budgeted in groceries and gas, something I did not do on my past budget. I had always used my extra income to pay those. But since that income is not guaranteed I decided to budget myself some money for those items and use any extra income that does come my way towards my credit card debt.
As you can see I am allotting $205 towards my credit card debt on top of paying my minimum payments. At this rate alone it would take me 31 months to pay off my total cc debt. But with me applying majority of my bonuses, tax refund, and extra income, I will definitely get this paid off way before 31 months. I have currently set a goal of October 2008 to be cc debt free. I just need to make sure I don't charge ANYTHING more to my credit cards.
I have some extra money coming my way in the next few days. My laptop rebate from Office Depot was mailed on the 27th and should be here by Friday. That is $150. I get my last cash out from Cash Duck this Friday and that is for $82.
That is $232 bucks. I will most likely put the money in my spending account and use it for groceries and gas for the next month or so. If I continue to do the $30/week for groceries and miscellaneous stuff and if I do $30 a week for gas (this is the most extreme....I drive 130 miles to and from work) the money will last me a month. During this time I will look for other avenues to make extra money and continue to use it like I am now. That way I can use all my remaining balance of my paycheck, after bills are paid, to apply towards my credit card debt.
I still have American Express coming but I gotta wait until the credit my points to my account. Since I am not going to do the house right now I am not sure what reward I will cash out. Well we will see when that time comes.
Speaking of cc debt, I did my end of the month last night. I am so ashamed of how much my cc debt increased by. But I am trying to stay positive. I have a tendency to think negative and this affects my health and my well-being. So I will remain positive and remind myself that a year from now I will will do my end of the month report and put $0 in my cc debt column.
I'll do a post on that later today.
I need to get that book.......The Secret............get this positive outlook, good karma thing down packed.
Tuesday, August 28, 2007
My sister's wedding was beautiful. I cried when I saw her all dressed up. She was beautiful. *sigh* My baby sis is all grown up. She's married now.
I spent a lot of money but I am cool with it. Seeing her so happy made it all worth it. Me and moms and my other sis are cool now. My mom tried her best to ignore me the first day I was down there but it didn't last too long. I love my family and realize that I wouldn't trade their love for anything in the world. We had a talk about the drama that went down and she understands my situation and I understand hers. I had so much fun seeing my relatives and friends.
I used to dream of being a wedding coordinator when I was little. After this past weekend, I am glad I gave up that mess. OMG!! Now I see how bridezillas emerge. People were pissing me off and I wasn't even the bride. Wow. I can just imagine how it's gonna be when I get married. LOL.
Monday, August 27, 2007
As you all know, one of my main goals is to become a homeowner by April of 2008. After touching base with my real estate agent, evaluating my situation, and praying for guidance, I have decided to put off my homeownership dreams for another year or so.
Well there are a few reasons why. I have tried numerous online mortgage calculators and all of them have calculated that the amount of home I can afford is around $80,000. This calculation is based on my income, debt payments, and amount of down payment available. The only homes I have seen for under $100K have been the "handyman specials" and that aint me. I called my real estate agent to speak to him about this and he transfered me to the company's mortgage broker. She did some calculations and said that I was looking at a house payment of $2000 a month for a $200K home. I wouldn't be able to afford that at all on my current take home salary. Paying $2K a month in home related expenses (mortgage, PMI, insurance, taxes) plus $1200 for debt leaves about $500 for my daughter's school, food, gas, utilities, savings. The only way I can afford that is if I got a huge raise before February 2008 or if I got myself a second job.
Don't get me wrong. Homeownership is still in my plans, just not by April 2008 like I planned. I want to become a homeowner and STAY one. Foreclosure and bankruptcy have no place in my dreams. When it came to homeownership I don't believe I was looking at the big picture. I could probably wing that $2K house payment and my bills but what kind of life would my daughter and I have. I wouldn't have any extra money to LIVE. And I don't think I want to sacrifice that just to own a home. What good would it do to own my own home and be miserable.
So I need to get myself in the best position I can financially before I take such a huge step. I am reevaluating my goals and plans and revising them yet again. I know that my main focuses now will be building up my emergency fund and eliminating my credit card debt. I have moved all but 75 cents of my home purchase fund money into my emergency fund. I am currently @ 93.4% of my $3000 goal. I have set up a monthly automatic transfer from my checking account to my E-fund account of $200. I will reach my initial goal next month. Once I reach my E-fund goal I will move my goal out to $10,000. As for my credit card debt, I will continue to attack that with everything I got. I intend to beat that biotch done till she is annihilated. She is really urking the ish out of me. I hate her with a passion. Dumb behind heffa........oopps.......sorry, got carried away there. :-D I will apply majority of my bonuses and tax refund to my cc debt on top of the monthly amount I have set up. My goal is to be completely freed of it by June 2008 but I think I will hit my mark way before then.
Well that's some of whats been on my mind. I got some other things in my life I need to focus on right now. Such as my daughter, my health, and my relationship with God. I'll get into those another time.
Wednesday, August 22, 2007
Applying for any form of credit usually involves the lender performing an initial check of your credit rating; this is especially true when it comes to mortgages. Checking your report enables them to see how reliable you have been in the past with financial products. With this information they will decide whether or not they are going to approve you for a mortgage, and if so, what interest rate and terms and conditions you will be bound too.
There a number of things that can negatively and positively affect your credit rating, such as; maxing out credit cards; declaring bankruptcy; collections; opening several accounts within a few months; and at the other end of the spectrum – repaying credit cards / loans promptly; living at the same address and being in the same job for some years etc.
So, if it turns out that your credit rating is quite low, getting a mortgage is going to be a bit trickier than if you had a higher rating. However, all is not lost! There are a number of steps that you can take and these have been outlined below.
- The first thing you should do is get in touch with a mortgage broker or IFA (Independent Financial Advisor). They will be able to put you in touch with lenders that will consider you and help you do through the following steps.
2. Get a copy of your credit report. You can either do this yourself or get a broker to do it for you. If you’ve been declined, then checking your reports to make sure there are no errors negatively affecting your credit rating will be well worth it. It’s a good idea getting a ‘tri-merge’ report, which merges reports from all 3 of the credit report agencies(Equifax, Transunion and Experian). If you do find any errors, these can disputed online at the agencies websites.
- Start improving your rating as soon as possible. This will take time, but it’s wise to try and improve before applying/reapplying for a mortgage. Sometimes an improvement of only a few points will put you into a better category, allowing you access to lower interest rates, better terms & conditions and of course, a bigger mortgage. You can improve your score in a number of ways; paying bills on time; paying off existing lines of credit; not opening any new lines of credit etc.
- Shopping around is vital when you have a background of bad credit. This is because many lenders are eager to lend to individuals with a low credit rating because they essentially have fewer options. They can be charged higher interest rates and there is an increased chance that they will default on the loan. The good news here though, is that the number of reputable lenders who offer bad credit mortgage loans is constantly increasing. It’s worth noting though, that although requesting quotes from multiple lenders is a good idea, it’s important that you stipulate that you are just seeking a quote. This is because your credit report shows if you make multiple credit applications, and lenders can interpret multiple credit applications as a sign that you are desperate for money or have been rejected elsewhere.
Monday, August 20, 2007
I was tagged by Krystal and Saving Diva to continue Moolanomy's My One Money Advice (MOMA) Meme. Moolanomy is trying to promote financial responsibility and awareness in our hyper consumption society.
The question: If you can give one advice, tip, or story related to money, what would you share?
Since I was tagged twice I will share two. I think both are extremely important.
So go back to that list of 2007 financial goals, and if you haven't done so already, create your plan for each one.
Financial responsibility isn't something you just pick up. You have to learn it. Teach yourself.
I just got back from a weekend at the parents. Today ended on a really bad note. As I said in a previous post, I had promised my mom that I would pay their electricity bill. Well after looking at my finances and realizing that I would be shelling out around a whole lotta moola this week for my sister's wedding, I came to the conclusion that I wasn't gonna be able to afford to pay their $332 electric bill. So as I was packing up to leave my mom asked me if I paid the bill. I told her that I had not. I explained that I had a lot of things to pay this week and that since the electric bill wasn't due until the 24th, that I would see how my finances looked then and let her know if I could pay it. She responds, "If you ain't gonna pay it now then forget about it". And then starts going off on me.
Are you serious?!! Because I won't pay the bill NOW you catching a tude with me? I am furious at this point. After all I have done, she got the nerve to act like I am this heartless daughter who won't put up 2 cents to help out her family. I am digging myself further and further into debt for them and this is my thanks. Of course my sisters are looking at me crazy and saying how they can't believe I did that to her. Did what?? Ask for a little time so I can gather up my finances before I put myself another $332 deeper into the black abyss that is debt. Oh......my bad! Guess I should have jumped in with both feet.
Needless to say they ain't speaking to me. Five days before my sister's wedding and it comes down to this. I feel that I had every right to do what I did but that still didn't stop me from feeling real shitty. But then I cleaned out my daughter's closet and drawers and realized that she can't fit majority of the clothes and that she is now a size 12 in shoes. Luckily I did a little school shopping and bought larger clothes so she is set for this week. But my baby will need more clothes and shoes. And since I have been going solo for the last two months I really didn't buy that much groceries. I just got what I needed. So now we need food cuz she likes to eat. And I also have to start paying for her school again. The list goes on. And as it does I am feeling less and less shitty at having put my foot down. My daughter needs me. If I can't provide for her who the heck will. Moms can't understand that then on well.
Friday, August 17, 2007
I took my car in to Tire Kingdom to get serviced this morning. I had a 7:30 am appointment because I had a lot of errands to run before leaving town at 12 pm. All I wanted was an oil change and for them to check my engine and see why it was making this weird noise. I mean the car is a year and a half old. What problem could it have? Maybe a minor one........but I wasn't expecting this.
After waiting 30 minutes they came back and told me that it's my belt tensioner assembly and it would cost $260 to fix. Damn!! What the heck is that, how serious of a problem is it, and why is this happening to a car that is less than 2 years old? Needless to say, with me driving 300+ miles later that day, it was essential I get the car fixed. Alright fine......fix the damn car! (I was pissed).
So they fix the car.....or so they thought they did. The car is still making the same dang on noise. The mechanic decides to dig a little deeper. DIG A LIL DEEPER?!!!? Ummm isn't that what you did in the first place? How did we come to the conclusion of the belt tensioner assembly being the issue? UGH!! I am so pissed at this point I am calm. You know the kind.......deadly calm. I tell the service manager to go ahead and have the mechanic "dig deeper" but I wasn't paying for the new assembly that they just put in. He opened his mouth to say something, I gave him that "Don't F with me" look, and he nodded his head and went back to the mechanic in the service bay. An hour later they come back and tell me that it's my water pump and that I would need to take it to Honda to get it fixed. LOL. Yeah whatever man. I paid the $38 bucks for the oil change, they gave me my keys, and I bizzounced.
When I got to Honda I spoke to a service advisor and was told that the water pump would be covered under my warranty if I was under the 36,000 mile limit. Well guess what? BB clocked in at 39,185 miles (Yes I named my car.......BB stands for Black Baby......What?....Did you say something?.......Oh.....Ok). So I have to pay $500 for a water pump plus labor and fees because I am 3000 miles over my warranty max? I didn't think I could get more ticked off but that did it. I purchased a brand new car in order to avoid situations like this. And I purchased a Honda because I believed it to be a reliable car. Obviously I was sadly mistaken because I am having to pay $500+ for a damn water pump on a vehicle I purchased a year and a half ago. The rep must have seen that I was getting angry so he said he would speak to his manager and see what he could do. They could fix the car today but they wouldn't be able to look at it for another hour or so. And then they would need to get the parts from their dealer and basically my car won't be ready until about 5 or 6. Its 11 am by this point and I have had no breakfast. I am tired and I got stuff to do but I need to get this car fixed. So I leave the car with Honda. Luckily they have a Hertz right next door. Convenient huh?? I go and rent a car for the day. Cost = $35.
Sigh anyways to make a long story short (I probably should have done that 2 paragraphs ago) I started thinking about how all this ish could have been avoided if I had used the $3000 I got from my parents for graduation to purchase a good used vehicle. I mean think about all the money I have dished out on this car and then to have this slap me in my face. I used $2500 as down payment on the Honda and I have been paying around $530 a month for my car note. That's a total of $12,570 spent on this car. And to those who say that a used car may have given me more issues, I say maybe so. If I didn't take my time to do my homework and just bought the first pretty car I saw then I probably would have winded up with a used car with a whole lotta issues. But I would have done my homework and I would have had my dad and uncle with me to help. And I know I would have gotten a decent vehicle. Unfortunately I didn't have the kind of mentality then that I have now.
You live and you learn. That lesson might cost you 12 G's but you learn.
Oh yeah.....Honda called me at 5 to pick up my car and I paid $0. That was God all the way. I could have dished out $972 today. Instead I only paid out $73 bucks and my car got fixed.
Thursday, August 16, 2007
Today was pay day which is a happy time in Dimples world. I transfered money to my savings accounts and paid off some bills. I am almost at the halfway point of my E-fund goal.
After reading different posts on how much your emergency fund should equal, I realized that my initial goal of $3000 is way off mark. Basically your emergency fund should equal three to six months worth of basic living expenses. My definition of basic living expenses is: bills + groceries + gas. So my emergency fund should be between $8625 and $17250. I think an E-fund of $10K will be more than adequate for me and my daughter. Once I reach my initial goal of $3000 I will extend it to $10,000.
Not doing so good in the debt area. My sister's wedding is next week and I gotta dish out some money for things like a dress for the wedding, weddings gifts, bachelorette party. I am not charging this to any credit cards but I am going to need to use some of the money I would have applied to my cc debt. And I am taking $300 to pay my folks electric bill.
I am a little worried that I won't be ready to by my home come February. I tried out several different calculators to see how much home I could afford and I got horrible results. Based on the calculators, the most home I can afford is $72K. Where am I going to find a house for $72K? Are these calculators reliable? Well, I set up a meeting with my realtor tomorrow. I plan on talking to him about where I am currently and where I plan to be by February and see if they can calculate how much home I can afford. I'll keep you guys updated on that.
Leaving to go out of town tomorrow afternoon. Going to pick up my baby from her 2 month vacay. I missed my sweet pea. School starts on Monday. Gotta get some school shopping in some time this week.
Wednesday, August 15, 2007
Single Ma did a post on life insurance last week. It wasn't until I read it that I realized that I was short changing my daughter with my current life insurance policy. It's kind of scary actually. To think that if something happened to me (God forbid), my daughter would most likely get NOTHING even though I have life insurance.
I currently have a 5-year term life insurance policy for $50K. I got the policy a couple of months after my daughter was born. I didn't plan on getting it. I was in the midst of getting car insurance for a used car I just bought and the insurance agent said I would save a lot of money on my car insurance if I had multiple lines. So I took out some renter's insurance and an insurance policy. Only thing I was worried about was getting a policy with a low payment and high payout. And for some reason $50K was huge to me.
Needless to say my whole approach on life insurance was sadly misguided. Looking at the debt I had, that policy wouldn't even cover my credit card debt and student loans and my baby would get nothing. My policy ends this December. I am researching information on life insurance and looking into alternate companies. Depending what I find, I may stick with my insurance company or switch to someone else. I have my life insurance through Statefarm and I only pay $12 a month for my policy.
A lot of websites offer life insurance calculators to calculate how much life insurance you need based on all your financial information such as total debt, savings, retirement, and income. I used 3 different life insurance calculators from different websites and the amount of life insurance I need ranged from $287K to $345K. I'll use these numbers to shop for an affordable policy. My only question is how much of a term should I be looking at? My daughter's 5. She should be down with college by age 23, depending on what she majors in. I'll give her a 2 year buffer. So I am thinking at least a 20 year term policy. That way I can reevaluate everything after she is done with college and is on her own.
What happens when I buy my home? My calculations were done based on my current financial standing. Can I revise my policy when my financial status changes? I'll research that tomorrow.
*yawns* I'm sleepy.
Thursday, August 9, 2007
Ok this may sound like a dumb question but I just wanted to make sure I am not messing up in doing this.
I have opened up 4 savings accounts this year. ING Direct, Capital One, Citibank and WAMU (daughter's account). I am contemplating closing my checking account with WAMU, which serves as my spending account, and opening up a high yield checking account with someone else. I am just worried that all this activity might be recorded on some system or something. I know that banks have their own banking system but I only thought that was for folks who owe money or who are passing bad checks.
Of course this is definitely the last account I open up for a long time. I don't have any need for another one. I would just prefer to earn some interest on the money I have in that account.
Anyways, if anyone has any insight on this I would appreciate. I am just looking around at the moment. I definitely want to make sure I am not hurting myself by doing this.
It's a sad sad day indeed. I woke up to find the following email from Kira, Cash Duck creator and owner:
" Unfortunately, I have a sad announcement to make. As of the end of this month, CashDuck will be closing.
This is a decision that I did not want to make, and even two weeks ago said that I didn't want to close. But the way things have been going, I feel like if CashDuck continues to run that things are unlikely to improve. Since the implementation of the new payout rules, traffic has really dwindled. So far this month all of the users of CashDuck combined have not earned what they did in an average DAY of April or May. I really wanted to give the shopping section some time, but I am losing money and new obstacles are thrown up every day.
I have had such a wonderful experience running CashDuck and it has changed me as a person. I've learned a LOT, and in fact partially due to my experience with CashDuck I will be applying for an MBA program. I am excited about potentially exploring other business ideas in the future. I know though that no business will last forever, and it is best now to end on a good note, instead of waiting until there is nothing left.
Thank you everyone for your support and encouragement. I have met many wonderful people and I consider myself enriched by you all.
My main extra money source is shutting down. I have been with Cash Duck since April and I have made a total of $412.04. Now I really gotta get in hustlette mode and find a replacement.
Wednesday, August 8, 2007
As I told you guys in a previous post, I suffer from emotional shopper syndrome (ESS). I have been taking a number of steps to curing myself of that.
- Remove all credit cards from my wallet
- Remove all debit cards except for my spending account
I also noticed that the way I grocery shop may be causing me to waste money. Since my daughter has been gone I have time to take care of things more frequently. This means I don't wait to the last minute to grocery shop or wait until my fridge is almost bare (I used to think that is when you should shop). Well I have been going to the grocery store almost every week. And for some reason I have only spent at most $25 a week. That means I am spending no more than $100 a month on groceries. So why when I shop the other way do I spend over $200 on groceries?? The only conclusion that I can draw is that shopping every week allows me to purchase things I know I will use that week. While with shopping once or twice a month, I purchase items that I MAY need or items that I have but I assume I will run out of before my next shop day. Therefore I spend more money. And majority of the time, I don't use everything I purchased. I don't know how many times I have had to clean out my fridge because one or more items went bad before I could get to them. Thats money wasted.
So based on all this I have come up with another strategy. I have decided to give my self an allowance of $30 a week. I don't normally carry cash on me so I will withdraw the cash from an ATM or store (using cash back) every weekend in order to use for the following week. The $30 a week will only be for groceries and essentials like toothpaste, toilet paper, etc. If I don't use ALL $30 one week it will roll over to the next week and I will only withdraw enough to equal a total of $30. I am still keeping my spending account debit card in my purse but it is wrapped up in foil and I have a sticky note on it that says "Only 4 Emergencies".
I know this all seems extreme but getting rid of my credit card debt and buying a home mean the world to me. If I need to sacrifice and do some crazy ish then so be it. It will be all worth it in the end. Hopefully my new strategy will curb my emotional spending.
Unless I win the lottery.............then all bets are off!!!!!!!! LMAO.
Sunday, August 5, 2007
Just wanted to share some neat sites I use. Some I found this weekend. Enjoy!
- FinWeb: Provides valuable information and resources on pertinent financial topics through informative financial articles.
- Mortgage Professor: Tons of info on mortgage loans, buying a home, refinancing, etc. It also has a section on common mistakes to avoid. Great site in my opinion.
- Down Payment Solutions: Has info on first time home buyer programs, over 1000 down payment assistance programs, etc.
- Beauty Eats: Fun new blog about how specific foods-from green tea to vitamin C-can help fight everything from aging and acne to serious skin disorders, and make hair and nails super-healthy too.
- Cool House Plans: Internet house plans provider. Pretty neat.
- Soul Food Calculator: Tee hee. How much damage did the family reunion barbecue really do? Auntie's famous collard greens (with turkey): Only 34 calories for 1/2 a cup. Not bad......now if I could only find one for Caribbean food.
- Black Women's Health: For my sistahs!. Empowering you to live healthy and well....for life.
- Single Mom Resources: All kinds of resources for my single mommies.
Friday, August 3, 2007
I have ESS...........emotional shopper syndrome.
I go on a shopping/spending binge anytime I am in a funk. The spending beast comes out, I spend money like it grew on trees, and afterwards I feel better. I get a sense of comfort when I do this. I used to do the same thing with food. Then I realized I needed another avenue to get that comfort. I don't know what compelled me to think shopping was the best choice. LOL.
Well I am tired of the spending beast. That heffa needs to get beat down and eliminated. Poor thing doesn't know that D-day is near.
So how am I going to cure my ESS? I have started to use exercise and/or reading a book in place of the shopping. I have also made a reminder of what saving my money and decreasing my debt will get me. I took an index card and glued a picture I took of a beautiful house I pass by everyday on the drive to and from work. I also wrote little sayings around the house about being debt free, and purchasing my first home all on my own. I took it to Office Depot and had it laminated. I put the card in my purse inside my wallet where my debit cards are kept and also where my credit cards go if I had them in there. That way, anytime I go to spend money, I will have to look at the card with the beautiful house and the inspirational words. I think that this will help me stay on track and realize that the $50 I am about to spend at Target on frivolous things is not worth my future home.
Not having my credit cards easily at my disposable has been helping with control my ESS. I haven't done any emotional shopping in 3 weeks. I almost backslid on Wednesday when a project I am coordinating at work exceeded the budget by a significant amount. I had to put an emergency hold on the project until I could fix the $$ problem. I was stressed out the whole day. I don't remember my drive home but the next thing I know I am in Target with a basket full of ish. I went to the check out counter and the total came up to $76.41. I open my purse to get a cc to pay and guess what?! A sista ain't got no credit card. Only thing in my purse is my debit card for my spending account. An account that only has $35. And the money I have made form my Ebay and Craig's List sales are home in an envelope awaiting deposit. As embarrassing as it was to tell the cashier I had no money on me and walk out the store empty handed, I was a little relieved that I hadn't spent all that money. Instead I went home, popped some low fat popcorn, and read a book (Girl, Get Your Money Straight).
It's going to be a long road filled with many bumps and road blocks but I will make it.
And for my fellow ESS folks, looks like Money Central has an article on 7 Ways to Control Your Emotional Spending. Do whatever works for you. As long as you find your cure.
Thursday, August 2, 2007
Back in February, I was referred to a real estate agent from a close friend. The guy I had been working with prior to then, was fairly new to the game and wasn't giving me the info I needed. I contacted the new agent and spoke to him about his company and his years and quality of experience. I was confident in him and what he could do for me and decided to take him on as my realtor. I was very upfront with what I was looking for. Here is the list I gave him:
- Single family home preferably (I am open to a townhouse or condo if a single family home meeting my requirements couldn't be found)
- Purchase price: $200K or less (Based on how much home I can afford)
- No down payment
- Little to no HOA fee (No higher than $50 a month or equivalent)
- Good condition. No "handyman specials". (I am a single mom. I don't have the time nor the patience to fix up folk's mess. I prefer a home that isn't missing the kitchen cabinets or a backyard that needs complete renovation.)
- 3+ bedrooms
- 1200+ square feet
- In the Orlando area. Preferably around downtown or east side
- Quiet and safe neighborhood (Need I say more??)
- Credit Score: 720 or higher
- Debt-to-Income Ratio: 40% or lower
- Credit Balance-to-Credit Limit Ratio: 35% or lower
- Reserves: @ least $6000
- Closing Cost: @ least $3000
The debt-to-income ratio is your monthly expenses divided by your gross monthly income. My monthly expenses consist of my rent, car note, student loan, personal loan, and credit cards. The ratio shows what percentage of you income is available for a mortgage payment after all obligations are met.
The credit balance to credit limit ratio is the total balance on your credit cards divided by the total credit limit. This ratio applies to each individual credit card account and your credit card debt as a whole. Lowering this ratio also increases your credit score.
Reserves consists of a combination of your 401K, savings, assets, investments, etc. Your reserve should equal about two to three months of your estimated mortgage payment.
Closing costs are costs associated with the transaction of executing the mortgage contract and conveying the title to the property to the buyer. The amount varies, but I did some research and 1.5%-3% the loan amount is about average.
I am pretty much on track with all 5. My credit score is currently a 652. Single Ma posted a good comment on keeping track of all your credit scores because you never know which credit score the lender will pull. The brokers I have spoken to say that mortgage companies look at all three scores and take the middle one, which is what I have been going by. I'll still keep the other two in mind. I wouldn't worry to much about Experian because it is extremely close to my Transunion score. Unfortunately my Equifax is extremely lower than the other two. My 3 credit scores are as follows:
A 6 year old paid-off collection account that is showing on Equifax seems to be the major factor to the low score. The collection was on my other credit reports but came off 2 years ago. I tried getting it off Equifax but them mofos won't budge. Darn them to heck!! I gotta find a way to get the Equifax score up near the other two.
My debt to income ratio is currently at 46%. Once I reach my credit score goal I will refinance my car loan which should lower my payment by at least $100. I will also refinance my personal loan to get the lowest APR (11%) which will decrease my monthly payment by $50. I am continuing to pay down my debt which will in turn lower my monthly expense by about $120 by February 2008. All this will in turn lower my ratio to 39% meeting my 40% or lower goal.
My current credit balance to credit limit ratio is 47%. Again, if I keep on track with my cc debt payoff plan, my ratio will be 31% by February 2008.
I have already met my reserves goal. My 401K balance is $8765 and my savings balance is $2645. Thats a total of $11410 currently in reserves. I'll increase that by about $8000 by February.
My home purchase fund will basically be used for my closing costs, but only if needed. Ideally I would like to find a buyer that will pay my closing costs. And if the market continues to be a buyer's market by the time I am ready, I am certain I will find someone. If that happens, I will use some of the money in that account to furnish my new home and leave the rest as a E-fund for home repairs.
The financial picture I am trying to achieve is based off my financial profile, information from the mortgage broker, and research I have done. I am pretty confident that achieving these goals will allow me to purchase a nice home with an affordable mortgage. Putting a 20% down payment does not have that much of an effect on your mortgage payment. I have tried all mortgage calculators I could find on the web and the biggest difference between mortgage payment on 100% the purchase price versus 80% the purchase price was $130. So why waste 4 years to save up $20,000 just to save $130 a month?? And in 4 years, $200,000 won't get me the same house. Anyways thats my logic.
For the folks who are looking to purchase a home in the next year or so, what will your financial picture look like right before you start shopping?
Wednesday, August 1, 2007
July Monthly Report:
Well as you can tell, I didn't do to well in the cc debt area. There was a net increase of $479 bucks. I am moving steadily to my savings goals. Once I reach my initial E-Fund goal I will extend the goal to $7500, which is about 3 months of my expenses. Everything else is on track.
I have been tracking my net worth since I started blogging back in February. I never posted anything about it because I was a little embarrassed of how much I was in the negative. But I gotta face the music. So here it is:
I also have it on the side bar to the right. So hopefully we can start watching that joker increase.
Well low and behold my credit score increased this month by 12 points!! YEAHH!!!!!!!!
June Credit Score: 640
July Credit Score: 652
I hope I can reach 700 way before December. I'd like to refinance my car loan and get my $532 car note lowered as much as possible. That way I can take the amount I am saving and redirect to my credit card debt. Or I can continue to pay the $532 and start the process of paying down my car loan significantly.
Alright thats it for me today. A sista is tired. I worked 10 hours today..............*yawns*.....time for some ice cream and a lil tv.
I am in the middle of updating my net worth and getting things ready for my end of the month financial report for July. I was in the midst of listing the balance of my student loans when I realized that there was no change. Did I forget a payment? I logged on to my account and saw that I made a payment for this month. So why hadn't my principal balance changed?? I looked at my past statements and it turns out that my principal balance has remained the same since February. I was furious! Something was wrong and needed to get fixed pronto.
I called the student loan folks and spoke to a rep. After about 30 minutes on the phone I found out that because of the payment I chose, my payments were only being applied to the interest on my loan and would be for the first two years of repayment. After the two years, my payment would increase by $20, which would start applying to the principal balance. WHAT?? Of course this wasn't explained to me during the consolidation process. Maybe it was somewhere in the 5 or so pages of finance jargon I received through the mail but at that time I was still in college and was focused on having the smallest loan payment possible. I currently have the graduated payment option. If I chose the standard option my payment amount would double. I can't afford to do that right now. Not with my current goals.
Of course I noticed another discrepancy while speaking to the rep. From what she explained to me, my current payment is applied to the interest and anything I pay above that should be applied to the principal balance. Well my payment amount is $141 and I have paid $145 since February. And since my principal balance hasn't changed then obviously that overage has not been applied to it. Turns out that I need to specify where the extra money goes. Are you serious? I would think that it would be common sense to them that anything I pay over my minimum should go to the principal. Who in their right mind would want that money going into the loan company's hand. According to her, this same 'practice' applies to your mortgage, car payment, etc. This just shows how knowledge is so important.
I don't know how to really approach my student loan repayment now. It's last on the list in regards to my total debt payoff plan. Priority right now is my card debt, next will be my personal loan, then my car note, and last will be my student loan. I was hoping that paying $5-10 more on my monthly payment would help until I was ready to focus more on the loan. I'll probably keep that going and just mail my payment to the 'Special Payment' center instead of making them online. Once I get kill off my credit card debt I'll have them switch my payment plan to the standard option. At this rate, that won't be until July of 2008.
If only I could just win the lottery.........